By December 2012, with the approval of the Environmental Protection Agency (“EPA”), California was on the fast track to begin mandating the sale of zero-emission vehicles (“ZEVs”). Promulgated regulations require over 1.4 million ZEVs to be sold in California by 2025. Nine other states were hoping to implement similar ZEV programs. However, two industry giants are now petitioning EPA to reverse course in its approval of the ZEV regulations, fearing both a lack of charging infrastructure and the possible lack of consumer demand.

The California Air Resources Board (“CARB”) first enacted California’s ZEV regulations in 1990. Initially, the ZEV program mandated that 2% of vehicles for sale in California in 1998 and 10% of vehicles for sale in 2003 be ZEVs, including hydrogen fuel-cell and battery-electric varieties. However, in 1996, citing concerns about the advancement of ZEV technology, CARB dropped the 1998 deadline, and the 2003 mandate was abandoned in favor of a complicated reporting system involving the banking of credits.

On March 12, 2013, the Alliance of Automobile Manufacturers and the Association of Global Automakers filed a petition for reconsideration with the U.S. EPA to reassess CARB’s ZEV petition. The industry petition claims that the goals of the ZEV program are unattainable by the 2018 model year because of issues that are outside the control of industry, including the lack of a charging infrastructure and a consumer market skeptical of electric vehicles, hydrogen fuel-cell vehicles, and plug-in hybrids. While the ZEV regulations would mandate that plug-in hybrids and electric cars comprise 15.4% of total sales in California by 2025, the automobile industry contends that only 2% of total car sales in 2025 will be electric. Automotive groups argue that they might be able to build enough cars to meet the ZEV regulations, but there is no guarantee that consumers will actually buy them.

It remains to be seen how the EPA will respond to the industry petition for reconsideration. EPA has not indicated when or if it will render a reconsideration decision. Despite the petition and unless the EPA states otherwise, the ZEV regulations could go into effect and significantly impact the automotive industry in California starting with the 2018 model year.